Canada's largest crude-producing province Alberta downgraded its 2017-18 revenue forecast on Wednesday because of lower-than-expected oil prices that have battered the once-booming economy.
In a first quarter update the government said total revenues are likely to be C$44.4 billion this fiscal year, C$648 million lower than expected in the annual budget, and downgraded its U.S. crude oil price assumption to $49 a barrel from $55 a barrel. U.S. crude was last trading at $48.28 a barrel. The government's budget deficit forecast was unchanged at C$10.5 billion, with the revenue shortfall offset by using C$250 million from the C$500 million budgeted for risk adjustments, and an extra C$200 million in targeted savings. Alberta is home to Canada's oil sands, the world's third-largest crude reserves, and has been hard hit by the collapse in global crude prices since 2014. The left-leaning NDP government is attempting to balance the budget by boosting spending on infrastructure while maintaining health and education services, an approach that prompted ratings agency S&P to downgrade the province in May on concerns about high debt levels. "Our plan is clear and it is working," Alberta Finance Minister Joe Ceci said in a statement. "The severe and reckless cuts proposed by others to take billions out of the budget this year would hurt Alberta, put people out of work and weaken the economic recovery." The government said the economy is expected to grow 3.1 percent in 2017, up from the budget forecast of 2.6 percent, while the unemployment rate is expected to fall to 7.8 percent. Alberta has added nearly 17,000 jobs so far this year. (Reporting by Nia Williams; Editing by Chris Reese)